Power plants not to be funded from spl bondsFinance Div argues banks face problems for unsold tools

Posted by BankInfo on Fri, Dec 21 2012 10:57 am

Government’s finance division said it would not issue special bonds for implementing new power projects as banks face difficulties when bonds remain unsold.

Earlier, Power Division requested Finance Division for special bonds to finance newly proposed power plants, especially the coal-fired 1320 megawatt plant at Rampal in Bagerhat district.

In a letter to power division secretary on 13th of this month, Finance Division’s assistant secretary Abu Dayan Mohammed Ahsanullah conveyed their decision on issuing special bonds to fund power projects.

Meanwhile, the treasury bills and treasury bonds issued by government bond bazaar primary dealers through an auction failed to attract the clients.

As a result, Bangladesh Bank, banks and the government agencies concerned were forced to devolve the unsold bonds and bills on themselves, finance division letter said. It further said the government bills and bonds on the secondary market were not transacted to the expected level.

Besides, given the current financial strength and cash flow position in the country, finance division said the bonds without government guarantee have the lowest possibility of being sold.

In addition, interest rates of the new bonds will be very high, reads the finance division letter.

“So it’s not time befitting to issue new bonds in the market for implementing the new power projects,” the finance division directive said.

Power Division sought $302 million as equity for the newly-formed India-Bangladesh Friendship Power Company that will be responsible to set up the 1320MW coal-fired plant in Rampal, said a senior official.

He also said Bangladesh Power Development Board (BPDB) is likely to sign a power purchase agreement (PPA) with the Indian National Thermal Power Company (NTPC) on January 2 next year to implement the plant.

News: The Daily Sun/Bangladesh/21th-Dec-12